What is the Federal Inheritance Tax?

federal inheritanceAny time property is transferred to a beneficiary after the original owner passes away, federal inheritance tax applies. Federal inheritance taxes also referred to as the “estate tax,” is a tax that is based solely on the market value of the property transferred to beneficiaries from the estate.

How Does Federal Inheritance Tax Law Work?

Under the federal tax code over sought by the Internal Revenue Service (IRS), a formula is used to determine if any tax is due on property, assets, or money transferred in an estate settlement. The method used depends on the value of the property, and the method used to transfer it over to the beneficiary.

Calculating the Gross Estate Value

First, the fair market value of the entire estate is calculated, which includes all property, cash, bank accounts, stocks, bonds, investment accounts, real estate, insurance, and other items of value. The fair market value of all items is totaled up to establish the Gross Estate Value.

Adjusting the Gross Estate Value

After the total value is established, adjustments are applied. Adjustments include paying off debts associated with the estate, such as the remaining mortgage balance on the family home. Also, fees associated with settling the estate come out of the gross estate value, including:

  • Estate administration fees
  • Attorney’s fees
  • Court costs and filing fees

Lastly, the marital deduction is removed from the gross estate value for a surviving spouse receiving property.

Determining the Net Value

Once the applicable deductions are taken from the gross estate, the remaining amount is used for the “net value” of the estate. The net value is what the IRS uses to determine if there are applicable estate taxes due.

New Federal Exemptions

As of 2017, the IRS has updated exemptions for the estate and gift tax. For 2017, the exemption is $5.49 million per individual. Therefore, an individual can leave up to $5.49 million to each hair and pay no federal estate tax. Furthermore, a married couple can shield up to $10.98 million without any taxes being applied.

The Chances of Paying Estate Tax

Unless your estate is worth several million, the likelihood of the IRS requiring your estate to pay any taxes is small.

Furthermore, your attorney can work with you to minimize your estate tax burden using a trust and other charitable methods.

Worried About Federal Inheritance Taxes on Your Estate?

If you are worried that your beneficiaries will be burdened with heavy estate taxes, speak with the Law Office of Andrew M. Lamkin, P.C. We can assess the net value of your estate and help lessen the tax burden so that your loved ones do not have to worry about losing a large portion of their inheritance to taxes.

To explore your options, schedule a free, no-obligation consultation today by calling the office at 516-605-0625 or request a consultation online.

What Are the Inheritance Rights of Adopted Children?

Estate Planning Attorney Assisting Long Island Families with Adopted Children

Inheritance PosterIn general, an adopted child will typically have the same inheritance right to adoptive parents as biological children of those same parents. However, there are instances where adoptive children may not have the same inheritance rights, and there are estate issues unique to the adoptive parent/child relationship.

Understanding the Adoptive Parent-Child Relationship

When a parent adopts a minor child, it creates a legal relationship between parent and child. This also severs the relationship between the biological parents and the child who was given up for adoption. There is an exception to this rule, which falls under the stepparent adoption.

Parent and Child Inheritance Rights Explored

When a child is adopted, the legal ties between them and the biological parents are cut. However, the ties between the adoptive parent and adoptive child remain. An adopted child will receive certain inheritance benefits, including:

  • The right to receive property from their adoptive parents through intestacy laws. When an adoptive parent dies without a will in place, the children, including adoptive children, have the legal right to collect a portion of the estate as New York law dictates.
  • The right to adoptive parents’ estate even if they are left from the will by accident. Sometimes parents will adopt, but do not have time to update their estate plan. Children are protected when left out of a will. An adopted child has this right with their adoptive parents, but not their birth parents.
  • The right to be included under the “all of my children” reference in a person’s will. If an adoptive parent writes that “all my children” will receive a portion of the estate, then that qualifies the adoptive child to a portion of the estate, as well.

The Stepparent Issue

Stepparent adoptions are different than outright adoptions. This allows a stepparent to adopt a child, but the child has not completely severed ties to the birth parent. This is useful for blended family situations.

To create an estate plan, the birth parents and adoptive stepparents must work together to find what is best for the child. Also, the child’s legal and natural connection to each parent will be considered by the probate court judge.

When a Child is Socially Connected to Birth Parents

It is not uncommon for an open adoption to occur, which means that the child is still connected to the birth parents. While the child has no legal inheritance rights to the biological parents, either family can list the child in their estate plan if they wish to do so.

Get Insight About Your Adopted Child’s Rights – Contact a Long Island Estate Planning Professional

If you have children who are adopted, you will need to ensure that you follow estate laws dictated by the courts. Contact the Law Office of Andrew M. Lamkin, P.C. today to explore your options. Schedule a no-obligation consultation today by calling 516-605-0625 or requesting more information online.

How to Avoid Inheritance Disputes: 3 Expert Tips

Last Will After your death, the last thing you want is your loved ones to fight over your assets and liabilities.  The courts and anyone in the probate system also want these processes to go as smoothly as possible. Even with the best intentions, there are disputes that could arise. And, these disputes can often turn bitter – especially when the emotions of loss are driving everyone’s opinions.

There are things you can do to help lessen the likelihood that your loved ones will have drawn-out courtroom battles and bitter disputes.

Creating an Excellent, Well-Articulated Will

Having a will isn’t always enough – especially if your will is full of holes or missing critical information. Naturally, a will is better than no will at all, because leaving your heirs to figure out inheritance on their own can always lead to disaster.

What Happens if You Don’t Have a Will?

If you do not have an estate plan, the state’s laws will determine how your estate is distributed amongst your family. These intestacy laws can vary, but often involve first your marital status and then surviving children. If you did not want a certain child to inherit something, but didn’t have an estate plan dictating that, you will not be able to say much after you are deceased.

Creating a Valid Will is Important

Writing your intentions on paper and signing it isn’t enough. Instead, you need a will that is well-drafted and in accordance with the state’s laws. If your will is not valid, the courts will not honor your requests. A few things you must have present in order for your will to be valid under New York state laws include:

  • You must be at least 18 years old;
  • You must be of sound mind and body when writing the will;
  • You cannot be coerced into the will;
  • You must have had the intentions to create that estate plan;
  • You must have all assets listed and assign them to heirs;
  • You must have an estate plan that is signed, dated and witnessed.

Skipping Over Probate

Probate court is not automatically avoided with a will. Instead, your property will still go through probate where the court will then transfer property in accordance with your will. These processes are costly and lengthy – sometimes lasting anywhere from six months to a few years. Your estate planning attorney can advise you as to how you can avoid probate, such as establishing a revocable living trust or assigning death beneficiaries on specific accounts.

Create Durable Powers of Attorney and Living Wills

Inheritance disputes often come later in life, especially when an elderly loved one is no longer able to make decisions for themselves. By having living wills and durable powers of attorney already present, you can avoid these disputes regarding your estate and even your health care.

Meet With a Long Island Estate Planning Attorney to Dispute-Proof Your Plan

If you do not want your loved ones fighting over assets and decisions, meet with an attorney from the Law Office of Andrew M. Lamkin, P.C. today. We can assess your risks, assets and liabilities and help draft a will that is as dispute-proof as possible. Contact us at 516-605-0625 or fill out an online contact form to get started.

Can I Disinherit My Spouse?

You have spent the time and money creating an estate plan, but now you are going through a divorce. This is by far one of the most emotionally and legally trying times any person will ever go through. Not only do you have a myriad of legal documents to deal with, and requirements that can be daunting, but you may accidentally forget about updating your estate plan. Neglecting this very important step could mean that your ex-spouse will still inherit all of your property – which may not be what you intended post-divorce.

Most individuals in a divorce situation do not want their ex-spouse inheriting anything from their estate, which is why it is imperative you speak with an estate planning attorney to disinherit your spouse.

Marital Property and Assets

New York law requires equitable distribution of marital assets, which means all marital assets and liabilities are split equally in the eyes of the law – but not necessarily 50/50. Regardless of who paid for it or whose name is on the asset, the asset is still a marital asset if it was received or acquired during the marriage.

During the divorce process, you will split these marital assets. Some of these may have been associated with an estate plan, which means you will need to update your estate plan not only to reflect the spouse you are disinheriting, but the change in assets. If you are not selling and splitting the profits of those assets, then they would remain in your estate plan and your ex would still be able to receive their share of that property – whether you attempted to disinherit them or not.

Revising Your Will Is Key

Revising your estate plan is the only way you can disinherit a spouse. If you have not created a will, then now is the time to sit down with an estate planning attorney and do so. Your will can create specific instructions regarding your intentions to disinherit your ex-spouse. Because state intestate succession laws will take over if you do not have an estate plan or updated plan, this is an imperative step. You must decide who will inherit from you and who will not – and dictate that within your estate plan for the courts.

The most important feature of an estate plan is clarity. Then you will be able to clearly identify who should inherit property and assets after your death. You will also want to revise your life insurance policies, retirement plans and other documents that list your soon-to-be ex as your beneficiary – because even your estate plan cannot protect against those.

Speak with an Estate Planning Attorney in Long Island, NY Today

If you are going through a divorce, protect your assets from your ex-spouse by speaking with an estate planning attorney. The Law Office of Andrew M. Lamkin, P.C. can assist you with revising or creating a new estate plan that specifies who will inherit your assets. Schedule a consultation at 516-605-0625 or contact us online with your questions.

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